Trump’s $1B offshore wind payout to TotalEnergies sparks legal concerns

The Trump administration’s unusual deal to pay TotalEnergies to abandon its U.S. offshore wind ambitions might not be the last of its kind.

Earlier this week, the Interior Department said it would reimburse the French oil giant for nearly $1 billion in lease fees the company paid in 2022 for areas off the coasts of New York and North Carolina. In exchange, TotalEnergies pledged not to develop any U.S. offshore wind projects and to invest in fossil-gas infrastructure instead.

“I suspect [Interior] will do other deals with other companies,” Patrick Pouyanné, CEO of TotalEnergies, said in a CNBC interview on Tuesday. ​“So maybe we are the first to open the door.”

However, it is far from clear whether the department can legally carry out its agreement with TotalEnergies — or with any other leaseholders looking to cash out as the Trump administration wages an unrelenting campaign against existing and future U.S. offshore wind development.

The federal agency hasn’t released any clarifying details about the agreement, which Pouyanné and Interior Secretary Doug Burgum unveiled during the ongoing CERAWeek energy conference in Houston. But offshore wind experts said that no process exists for Interior’s Bureau of Ocean Energy Management to return the funds it collects from leasing federally controlled waters.

“There are significant questions about under what authority Interior is doing this,” said Elizabeth Klein, who led BOEM from 2023 to 2025 during the Biden administration.

To date, the bureau has leased over 3.4 million acres for offshore wind development along the east, west, and Gulf coasts of the United States. Over three dozen developers hold those leases, which they secured through a competitive bidding process. TotalEnergies paid $795 million for a large swath in the New York Bight area — which drew the highest bids in the nation’s history — and paid over $133 million for a lease in the Carolina Long Bay area.

That money didn’t just go to BOEM’s bank account and gather dust. Auction proceeds flow to the Treasury, where they’re folded into the federal government’s budget and promptly spent. Klein noted that the bureau’s annual budget hovers around $200 million, far short of what’s needed to issue a refund for something the size of the TotalEnergies deal.

So if BOEM isn’t paying back the energy behemoth, who is? 

According to Pouyanné on CNBC, ​“It’s not the taxpayer … [it’s] my money that I gave in ​’22 to the Treasury, which is coming back.”

Klein disputed that notion, saying that ​“his money” became the federal government’s as soon as TotalEnergies outbid other entities and purchased the leases, which it held for four years. She added that when Royal Dutch Shell relinquished its oil and gas leases in the waters off Alaska’s northwest coast in 2016, the oil major ate the $2.1 billion loss.

To reimburse TotalEnergies, Interior will most likely tap into the Justice Department’s Judgment Fund, which uses taxpayer dollars to settle lawsuits and claims against federal agencies. And in fact, U.S. Attorney General Pamela Bondi voiced support for the lease-refund agreement in Interior’s March 23 press release.

But here’s the hitch: Interior and TotalEnergies don’t appear to be settling any active litigation, even though the company referred to ​“settlement agreements” in announcing the arrangement.

Pouyanné said his company approached Interior first to avoid the possibility of a legal battle. The proposal was clearly appealing to the Trump administration, which has been on a losing streak in U.S. courts over its efforts to block construction of five wind farms on the East Coast. Developers have sued Interior in response to its December stop-work order, which companies said cost them millions of dollars a day.

Three of those projects — Coastal Virginia Offshore Wind, Revolution Wind, and Vineyard Wind — are now delivering electricity to the region’s stressed-out grids. The other two, Empire Wind and Sunrise Wind, are slated to start producing power later this year.

One of the broader, unanswered legal questions is whether using the Judgment Fund ​“is appropriate when you have an agreed-upon settlement” like the one with TotalEnergies, said Seth Kaplan, a vice president at Grid Strategies who previously worked in the offshore wind industry.

He and other experts said Interior’s deal brings to mind the ​“sue and settle” agreements that Republicans frequently blasted during the Democratic administrations of former presidents Barack Obama and Joe Biden. Those critics accused federal agencies of unethically striking deals with national environmental groups over things like air-quality standards and wildlife protections, all while going through the motions of a lawsuit to enact policy that otherwise would require congressional approval.

“That appears to be what is actually occurring here,” said Tony Irish, a former attorney in Interior’s Office of the Solicitor, who left the agency last year. He said the deal seems to be ​“a backdoor transaction” — one that’s intended to pursue the Trump administration’s policy goals of hampering renewable energy while boosting fossil fuels.

TotalEnergies’ pledge to spend its reimbursed lease fees on U.S. oil and gas projects is another confounding twist in the announcement. Irish said there doesn’t appear to be any legal basis for requiring a company to spend its settlement money in a particular way in exchange for receiving those dollars.

And while Burgum indicated that TotalEnergies would be investing in new fossil-fuel infrastructure, the lease funds will likely just offset its existing investments, Grist reports. The energy company is spending billions of dollars to build offshore oil platforms along the Gulf Coast, and last year it took a 10% stake in the expansion of a liquefied natural gas export terminal in Texas, called Rio Grande LNG, that was singled out in this week’s announcement.

Whether anyone can sue to stop the deal is another outstanding question.

The states of New York and North Carolina may be able to challenge the agreement, given that they stood to gain gigawatts’ worth of clean electricity if TotalEnergies had pursued its offshore wind projects. Community groups that could have benefited from the projects’ jobs and tax revenues are also considering their next steps — as are those that might be harmed by the expansion of these particular fossil-fuel projects.

Bekah Hinojosa, a community organizer in Brownsville, Texas, has been fighting the development of the Rio Grande LNG terminal for years, including during the Biden administration. Her organization, the South Texas Environmental Justice Network, is part of a lawsuit challenging the Federal Energy Regulatory Commission’s approval of the gas terminal’s expansion. Now, the group is considering how it can oppose Interior’s agreement with TotalEnergies.

“It definitely looks unjust,” she said. ​“We’re going to try to do everything we can to challenge and stop that deal from going forward.”